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National Grid’s share price is in the spotlight today as the utility company makes significant investments in the electric vehicle (EV) revolution. The shares closed at 829p, slightly higher than the intraday low of 805p.
Here’s what happened: National Grid, a major power provider in the UK, US, and other countries, recently made headlines with its strategic moves. The company announced plans to divest its gas network and acquire Western Power Distribution (WPD) for £7.8 billion. Additionally, it will sell its stake in PPL Group for £2.7 billion and its majority stake in National Grid Gas.
National Grid already operates high-voltage transmission networks, and it hopes that the WPD acquisition will help diversify its earnings. Notably, this acquisition positions the company to become a significant player in the rapidly growing EV industry, albeit indirectly. By selling its US business, National Grid is doubling down on the UK market as the country emerges from the pandemic.
This announcement comes just two weeks after Fitch downgraded National Grid’s credit rating from BBB to BBB-.
Looking at the four-hour chart, National Grid’s stock price has been trending downward recently. Yesterday, it gave back some of the gains it had made in the past few days, when it rose from 805p to 855p. The stock is still slightly below the 25-day exponential moving average. Yesterday’s price action seems to have invalidated the inverted head-and-shoulders pattern that had been forming.
In my view, the outlook for the stock is currently neutral. If the price drops below yesterday’s low of 805p, it would indicate that bears have the upper hand, potentially driving the stock down to 750p. On the other hand, if the price moves above 854p, it would suggest that bulls are in control, possibly pushing the stock up to 900p.